Intel (INTC) has long been the rumored buyer for chip maker Infineon (IFX) but today TechCrunch opined that Apple (AAPL) should be the buyer to control its own destiny as a mobile device company.
According to BusinessWeek.com there are 3 bidders for Ascendis Pharma: Novo Nordisk, Novartis AG’s Sandoz and Eli Lilly.
The 451 Group thinks Autonomy (AU) should set their sights past Open Text (OTEX) and look to acquire either TIBCO Software (TIBX) or Informatica (INFA). They “make far more sense to us as truly strategic acquisitions.”
Goldman Sachs (GS) is interested in taking over Slovenia’s largest bank Nove Ljubljanska Banka according to Reuters.
Also according to Reuters sources, France’s Casino Group (CO) has hired Deutsche Bank to advise on a potential bid for Carrefour’s (CA) Malaysia, Singapore and Thailand assets.
Source: Alacra Deal Pulse, http://pulse.alacra.com
Research Recap will be dialing back for the next week. When we pick up again, we will be shifting our emphasis to keeping you informed via Twitter. Now would be a great time to start following us there, if you don’t already.
The pace of federal securities class action filings slowed in the first half of 2010, with filings on track to decline for a second consecutive year, according to NERA’s latest semi-annual study.
The latest edition shows that, from January to June 2010, there were 101 fillings of securities class actions. If the pace of filings to date continues there will be a total of 202 federal securities class actions filed in 2010. This would represent a decline from the 221 filings observed in 2009 and the 248 filings in 2008.
Click image to enlarge.
One key factor in the decline of securities class action filings was a decline in cases related to the global credit crisis.
In the first half of 2010, there were 17 credit crisis cases filed; if the pace of such filings is maintained there will be 34 such cases filed in 2010. That would represent a sizeable drop from the 57 credit crisis-related cases filed in 2009 and the 103 filed in 2008. The decline in credit crisis-related filings was partially offset by an increase in the frequency of other types of filings—such as cases alleging breaches of fiduciary duty and cases filed against companies in the life sciences and technology sectors. Recent developments such as the Gulf of Mexico oil spill also produced new filings.
The median settlement in the first half of 2010 was considerably higher than in any prior year. At $11.8 million, the median settlement exceeded 2009’s value of $9 million by almost one-third, crossing the $10 million mark for the first time. According to the authors, one factor driving the increase in median settlement values was a substantial increase in median investor losses—a variable which correlates strongly with settlement size. Median investor losses in cases settled in the first half of the year were $436 million, the highest level since 1996.
For once there wasn’t much news on Apple (AAPL) news this week. As a result, last week’s leader, Piper Jaffray’s Gene Munster, who had become a fixture on the Alacra Pulse list of most-quoted analysts, failed to make the top ten. The best an Apple analyst could do was an eighth-place showing by Shaw Wu of Kaufman Bros.
Instead it was the oil industry that fueled much of this week’s list, topped by comments on that other big newsmaker BP (BP) by Oppenheimer & Co’s Fadel Gheit, who moved up from number seven last week.
Comments on strong earnings by Royal Dutch Shell (RDSA) and Exxon Mobil (XOM) boosted Phil Weiss of Argus Research to number two from number nine, Jason Kenney at ING Financial Markets to number three from number 18 and made for new entries from Panmure Gordon’s Peter Hitchens at number five and Pavel Molchanov of Raymond James at number seven.
Other newcomers included Kazumasa Kubota at Okasan Securities with comments on Panasonic’s acquisition of Sanyo Electric, Matt Thornton at Avian Research on Motorola’s (MOT) earnings and, Michael Kupinski at Noble Financial Group on big media companies. Bernstein’s Craig Moffett rounded out the top ten with comments on Comcast (CMCSA).
The following ranking of comments from the analysts most widely quoted in traditional and alternative media was derived from a search using Alacra Pulse. Click image to enlarge.
In this Guest Post,Oxford Analytica suggests regulatory reform might help make US companies more competitive.
President Barack Obama on July 21 signed the Restoring American Financial Stability Act, which contains relatively mild new regulatory measures unlikely significantly to reduce financial sector systemic risks. This reflects the fact that the Obama administration has not been able to counter the decades-old political discourse that maintains that most regulation is costly, counterproductive and likely to reduce the global competitiveness of US firms. However, there is evidence that some regulatory models might deliver long-term competitive advantages for US companies.
No ’smart regulation’. Obama tapped Cass Sunstein, an intellectual leader in developing new approaches to thinking about regulation, to head the White House Office of Information and Regulatory Affairs. Sunstein’s work draws insights from behavioural economics, and his writings and those of other theorists working in similar vein has important implications for financial regulations. However, a delay in Sunstein’s confirmation, combined with the administration’s broader political difficulties, has led to a failure to set forth or embrace new regulatory paradigms.
Instead, the administration has largely fought regulatory battles on ground defined by the proponents of deregulation, rather than attempting to explain how tougher (but also ’smarter’) regulatory standards might improve competitiveness.
- Financial sector setbacks. Both leading financial firms and political leaders failed to grasp the competitive advantages that might accrue to the industry from implementing better financial regulation. For example, the tightly defined Canadian financial regulatory system allowed its banks easily to weather the global financial meltdown and avoid hastily drafted post-crisis legislative clampdowns.
- Food safety climb down. The administration initially decided to pursue a modest overhaul of food safety legislation, but surrendered these efforts to other legislative priorities and failed to improve the regulatory framework.
- Energy policy. On energy policy, the administration did not follow up on new regulatory approaches that might allow US firms to take a lead in pioneering green technologies. The administration’s favoured comprehensive energy reform bill is moribund, so there will not be any action on the issue until the next Congress.
EU experience. The EU generally did not champion the deregulatory approach as strongly as the United States. At both the member state and the EU level, the EU has adopted tougher financial regulation, most notably in forcing bailed-out banks to divest themselves of assets, and in imposing tougher executive compensation rules. These financial regulations have generally focused on systemic stability, consumer or investor protection priorities, rather than encouraging competitiveness, but have been hampered by wider EU institutional deficiencies, including lack of uniform implementation and enforcement.
Canadian alternative. By contrast, Canada found it unnecessary to adopt major regulatory reforms, largely because its model of bank regulation allowed it comfortably to weather the global financial storm. Canada promotes its combination of better drafted capital standards, restrictions on bank leverage, and controls on securitisation as a model for other financial systems to emulate to forestall future banking crises.
Analysts with smaller firms made a good showing on Alacra Pulse’s ranking of most-quoted analysts in the first half of the year. But, demonstrating their bench strength, it was the big sell-side firms that dominated the list of most-quoted sell-side research firms.
Despite having only the sixth most-quoted analyst, UBS topped the rankings by a comfortable margin over Citigroup, JP Morgan and Sanford C. Bernstein, which were closely grouped. Of these three, only Bernstein’s Craig Moffett featured on the most-quoted individual analyst list. Likewise, fifth place Credit Suisse had no top-ten individual analyst, though Gene Munster’s top ranking helped Piper Jaffray reach number six on the research firm list.
Rounding out the top ten were Deutsche Bank, RBC Capital Markets (with Mike Abramsky also featuring on the analyst list), Morgan Stanley and Barclays Capital.
Despite being the only firm with two analysts on the most-quoted list(Maynard Um and Yair Reiner) , Oppenheimer & Co just missed the top ten, coming in at number 11, with half as many mentions as first-place UBS.
Of course, different firms have different attitudes towards publicizing their research, which helps explain why Goldman Sachs did not make the top ten.
The rest of the top 20: Stifel Nicolaus, Goldman Sachs, Jefferies & Co, Kaufman Bros, Panmure Gordon, Raymond James, BMO Capital Markets, Robert W. Baird and Macquarie.
One notable big firm did not make the top twenty: Bank of America Merrill Lynch came in at number 23. Oft-quoted banking analyst Dick Bove placed fourth on the individual list, but his Rochdale Securities only ranked number 38. Still, showing the power of personality, that was still higher than some bigger and better-know firms such as ING Financial Markets (41) and HSBC (59).
Several analysts have lowered their 12-month price target for Yahoo! (YHOO) following the company’s lackluster quarterly report. Most analyst targets are clustered in a narrow range between $18 and $21 with an Alacra Pulse Median of $19 based on the 13 most recently updated targets.
Although earnings were up, revenue slipped and analysts are worried that things might get more challenging for the search engine as it competes with the likes of Google (GOOG), Facebook and China’s Baidu (BIDU).
Citigroup’s Mark Mahaney downgraded shares of Yahoo to “Hold” from “Buy” and lowered his price target on the stock to $18 from $22 last week. ”We are concerned with YHOO’s overall Internet Usage Share Loss – now less than 10% of U.S. ‘Net usage minutes,” he wrote.
Search-related revenue at sites owned and operated by Yahoo declined 8 percent from 2009’s second quarter, while Google’s core paid search advertising revenue increased 24 percent in the same period, said Martin Pyykkonen of Janco Partners.
“Yahoo is clearly continuing to lose market share in paid search ad monetization and revenue growth vs. Google,” said Pyykkonen, who lowered his price target on Yahoo to $15 from $16 last week.
Oppenheimer & Co. analyst Jason Helfstein who has trimmed his price target on the company to $18 from $19, said Yahoo isn’t doing enough to cut costs. Heath Terry of FBR Capital Markets agrees and said, ”What they need are people staying up late, spending time on Yahoo…From all the numbers that we see, that’s just not happening.” Terry also cut Yahoo’s price target to $15 from $18.
James Mitchell of Goldman Sachs repeats his “Neutral” rating, but lowered his target to $18, from $21. “Yahoo! may prove the canary in the media coal mine who first signals a slowdown,” he says. “We view this outcome as unlikely given other media companies who have reported (Omnicom, Gannett) cited no slowdown, and given Yahoo stated advertising trends picked up in July.
But Barclays Capital analyst Douglas Anmuth said they are sticking with their positive view on Yahoo as the stock’s reward/risk remains attractive. However, Anmuth, who maintains an “Overweight” rating, cut the stock’s price target to $21 from $23 and said share prices and numbers need to be adjusted down for the short term.
Analysts at William Blair and Co. said they “are concerned that growth has stalled at Yahoo,” noting that the site’s number of page views have been decelerating, and now declining, since the second quarter of 2008. JPMorgan’s Imran Khan also cut Yahoo’s price target to $21 from $24 after the company’s quarterly earnings release.
Analysts don’t expect Yahoo! Japan’s decision to use Google for search to have an immediate impact, but it could lead to Yahoo! eventually dumping its 35% stake in the company. “An unanswered question is could you do some kind of tax-free spinoff to shareholders,” said Oppenheimer’s Helfstein.
The Alacra Pulse Median analyst price target for Yahoo! is $19, down from $21 a month ago but still 38% above the July 29 closing price of $13.76.
The most recent price targets by analysts featured on Alacra Pulse are shown below. Click image to enlarge.
The oil & gas industry was one of the leading feeders of the deal rumor mill during the first half of the year, based on an Alacra Deal Pulse analysis of traditional and alternative news sources. There were 32 deal rumors during the period. How much of that was due to BP (BP)?
The fallout from the Gulf oil spill did spur a surge in rumors involving BP (BP). Prior to the disaster, there was only one deal rumor concerning BP since the start of the year, and that was an acquisition by the then-expansionary company. Since the spill there have been at least 9 deal rumors ranging from sales of assets in places such as Alaska and Colombia, to a full or partial takeover of the company by the likes of BHP Billiton (BHP) or Royal Dutch Shell (RDSA). Other rumors involved the government of Pakistan and BP’s Russian partner TNK.
One rumor that turned to fact was BP’s sale of $7 billion of oil fields in Canada, Texas and Egypt to Apache Corporation (APA). Interestingly, the only BP-related deal rumor in the first quarter was the company’s acquisition of $7 billion of deepwater assets from Devon Energy (DVN) in March.
Given BP’s need to pay multi-billion oil spill costs and its avowed commitment to get smaller, look for more BP deal rumors -and actual deals- in the second half of the year.
Below is Alacra Pulse’s breakdown of deal rumors during the first half of the year, by region and by sector. Click image to enlarge.
Likewise the aftershocks of the financial meltdown have resulted in continuing rumors and deals in the banking sector. Big global banks such as Citigroup (C) and Royal Bank of Scotland Group (RBS) have been busy divesting assets, often at the demand of regulators, while other big banks like Banco Santander (SAN) are looking to get bigger by picking up some of those assets. Much of the activity has involved smaller regional banks changing hands. This process is far from over so more deals are guaranteed.
Coupled with the likelihood of big US banks looking to spin off some trading activities as a result of the financial reform act, and we’re likely to see some significant changes in the rankings of the world biggest banks in the next year or so.
Fitch Ratings suggests high-yield bonds of some food, beverage and restaurant companies may be worth a look as their risk of default is low. We are pleased to offer a complimentary download of Fitch’s full report, High Yield Food, Beverage, and Restaurants: Cross-Company Liquidity, Debt, and Covenant Analysis.
Fitch Ratings examines liquidity, debt structures and covenants for a subset of speculative grade food, beverage and restaurant companies. Fitch says liquidity is healthy, debt structures are fairly balanced between secured and unsecured obligations, and covenant restrictions provide adequate to good protection for bondholders.
Issuers reviewed and their IDRs include Tyson Foods, Inc. (Tyson; ‘BB’; Outlook Stable); Smithfield Foods, Inc. (Smithfield; ‘B-’; Outlook Stable); Dole Food Co. (Dole; ‘B’; Outlook Stable); Del Monte Foods Co. (Del Monte; ‘BB+’; Outlook Positive); ARAMARK Corporation (ARAMARK; ‘B’; Outlook Stable); Burger King Corporation (Burger King; ‘BB’; Outlook Stable); Constellation Brands, Inc. (Constellation; ‘BB’; Outlook Stable); and Dean Foods Co. (Dean; Not Rated). In aggregate, these firms have nearly $24 billion of debt.
Credit implications for these high yield food, beverage and restaurant companies are stable to positive. - Carla Norfleet Taylor, Director at Fitch.
Del Monte’s (DLM) ratings have a Positive Outlook, after being upgraded in May, while continued debt reduction concurrent with strong operating performance by Tyson (TSN) could result in positive rating actions.’
Liquidity and latest 12-month free cash flow for the firms in Fitch’s universe currently averages approximately $800 million and more than $290 million, respectively. Roughly 57% of the $24 billion in debt of these companies is secured while 43% is unsecured. Fitch views Dole’s (DOLE) covenants as being most restrictive but believes Smithfield (SFD provides the most protection in a leveraged buyout because of change of control put options in all of its bonds.
‘Default risk for even the lowest rated companies, such as Smithfield and Dole, is no longer an immediate concern due to recent refinancing activity and improved operating results,’ said Wesley E. Moultrie, Senior Director at Fitch.
High Yield Food, Beverage, and Restaurants: Cross-Company Liquidity, Debt, and Covenant Analysis has been made available free of charge to Research Recap users for 30 days by special arrangement with Fitch Ratings, an Alacra content partner. After 30 days, the report will revert to its regular AlacraStore price of $275.
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There is no question that the overall cost structure of that business has to come down.
Chief Pulse Comment by James McNerney, Chairman and CEO of Boeing (BA), saying the company’s defense business would have lower margins than expected this year because of pricing pressure in the United States.
Chief Speak highlights interesting comments from corporate leaders, based on a search of traditional and alternative media outlets using Alacra Pulse.